By Bill ReillyShare Article
SEC Addresses Climate Change Issues Affecting Financial Markets
Although still in the first quarter of 2021, the U.S. Securities and Exchange Commission (“SEC”) has issued four press releases/public statements on climate change appointments and initiatives:
On February 1, 2021 the SEC announced the appointment of Satyam Khanna as a Senior Policy Advisor for Climate and ESG (“Environmental, Social and Corporate Governance”). ESG refers to three central factors in measuring the sustainability and social impact of an investment in a company or business, and in determining the future financial performance of companies. This position will be responsible for advising the SEC on environmental, social, and governance matters, and for advancing related new initiatives across its offices and division.
On February 24, 2021 the Division of Corporate Finance was directed to review the extent to which public companies addressed the topics identified in the SEC Guidance in 2010 referencing disclosure of climate change matters. The directive also requires staff to:
- Assess compliance with disclosure obligations under the federal securities laws;
- Engage with public companies on climate-related issues;
- Absorb lessons on how the market currently is managing climate-related risk; and
- Use insights from this work to begin updating the 2010 guidance to take into account developments that have occurred in the 11 years since that guidance was issued.
On March 3, 2021 the SEC’s Division of Examinations published the SEC’s 2021 Examination Priorities. The priorities reflect the complicated, diverse, and evolving nature of the risks to investors and the markets, including climate and ESG. The Division will review registrant’s business continuity and disaster recovery plans, with a focus on those of systemically important registrants and whether these registrants are considering effective practices to improve response to large-scale events.
On March 4, 2021 the SEC announced the creation of a Climate and ESG Task Force within the Division of Enforcement. The initial focus will be to identify any material gaps or misstatements in issuers’ disclosure of climate risks under existing rules. The task force will analyze disclosure and compliance issues relating to investment advisers’ and funds’ ESG strategies. The task force will also evaluate and pursue tips, referrals and whistleblower complaints on ESG-related issues.
The issuance of these four announcements on the climate change issue in a span of just over 30 days should send a message to those subject to the SEC’s jurisdiction: if your firm has not adopted meaningful policies and procedures on this issue, you should invest the resources to do so at this time. Oyster is prepared to assist in developing effective policies and procedures, including updating and testing of business continuity plans as well as providing disclosure relating to ESG issues.
For more information about how Oyster Consulting can help your firm, click here or call (804) 965-5400 and one of your Relationship Managers will be happy to assist you.
Whether you are looking to change from self-clearing to fully-disclosed (or vice-versa), exploring your clearing options or starting a broker-dealer, Oyster can assist with the assessment, analysis, vendor selection and conversion processes.Download